Paulino Ungos III

Lawyer | Law Professor | Author

Tag: decision

  • Considered Neither the Intent Nor the Origin of the Gift

    Alvin claimed that on January 31, 2005, he was hired as a Hotel Personnel Planner for the Crewing Department of respondent Philippine Transmarine Carriers, Inc. (PTC), a manning agency acting as agent for foreign principals and engaged in the business of sending Filipino seafarers. Record established that at the start of his employment, Alvin was given PTC’s old company handbook.

    Alvin’s first few years with PTC went well, and he was promoted to Hotel Personnel Officer in 2008. In December 2010, he was seconded by PTC to its offshore processing unit, where he was given the position of “Scheduler.” During his time with PTC, he received several awards.

    However, in 2010, was given a verbal reprimand for a violation of PTC’s policy against receiving “pasalubong“.

    In 2012, PTC revised its Code of Discipline, which indicated more clearly its prohibition against accepting any gift with collective minimum value of Php500.00 and which punished the same with dismissal from employment. Record established that Alvin was served a copy of the revised Code of Discipline.

    On October 9, 2013, Alvin, along with a co-employee Aaron, was caught on the surveillance camera accepting a brown bag from Fred, another employee. It was soon discovered that the brown bag contained two bottles of Jack Daniel’s Whiskey given by Mustafa, a friend and co-employee of Alvin from a previous employment. Alvin was confronted about the incident and he readily admitted that he and Aaron did accept the gift. However, Alvin insisted that it was not a violation of the company policy for it did not come from a crewmember but from an outsider.

    An administrative hearing was held on November 6, 2013 and attended by Alvin. In said hearing, Aaron testified that Alvin told Fred not to hand the gift as there was a surveillance camera in his office and the handing of the gift might be misinterpreted. Aaron further stated that Alvin then advised Fred to proceed to the rear section of the crewing operations office.

    On November 12, 2013, Mustafa sent an email to PTC stating that he gifted Alvin two bottles of whiskey worth US$36.00 as a gesture of goodwill and token of their friendship. Mustafa also stated that personal favor between Alvin and Fred was not the reason for this gift.

    On November 22, 2013, Alvin received a written resolution from PTC informing him of the termination of his employment. PTC also terminated the employment of Aaron.

    On January 30, 2014, Alvin filed a case for illegal dismissal with the Labor Arbiter.

    Did PTC validly dismiss Alvin from employment?

    The Supreme Court ruled that Alvin was validly dismissed by PTC.

    The Court found that Alvin’s dismissal was anchored on his violation of a specific provision in PTC’s Code of Discipline which punished two separate acts:

    • offering or accepting, whether directly or indirectly, any gift with a collective value of Php500.00 or more, regardless of who it came from; and
    • acceptance by an employee of any gift — regardless of value — from a crew member, ex-crew member, or representative of a crew member.

    The Court noted from the said provision that a violation, even on the first instance, merited the penalty of dismissal from employment.

    In the present case, Alvin admitted to receiving a gift during his tenure with PTC. However, he contended that:

    • he did not violate PTC’s Code of Discipline since he did not receive the gift from a crew member, ex-crew member, or representative of a crew member; and
    • the provision was vague, unreasonable, and unfair.

    Alvin argued that an analysis of the said provision would reveal that the same was utterly vague, without any qualification as to from whom the gift should come from and for what consideration. Alvin pointed out that the governing principles behind the PTC provision did not take into account the intent or the origin of the gift. Alvin concluded that the subject provision should have been declared to be unreasonable and unfair.

    The Court did not agree, for it determined that Alvin’s act clearly fell under the first act punished by the subject provision in PTC’s Code of Discipline. According to the Court, Alvin received a gift with a value of $36.00, which was clearly above the Php500.00 threshold under the PTC provision. The Court further stated that the subject provision in PTC’s Code of Conduct was not vague and unreasonable. Said the Court: The fact that it did not specify the origin of the gift or the purpose for which the gift was given did not automatically mean that the PTC provision was vague. It simply meant that this “no gift” policy of PTC was absolute, that is, the origin or the purpose of the gift was irrelevant. In simple terms, the mere act of offering or receiving a gift constituted a violation.

    Significantly, the Court took into account PTC’s rationale for the subject provision. According to PTC, in view of the Philippine Overseas Employment Administration’s strict requirements and the severity of the corresponding penalty imposed at the first instance, firm implementation of company rules and regulations was indispensable. PTC added that it was only just and reasonable to adopt measures to ensure that any act of its officials, employees, and representatives that would merit the cancellation of its license be imposed the supreme penalty of dismissal.

    The Court stated that company policies and regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and must be complied with until finally revised or amended.1 Aparente, Sr. v. National Labor Relations Commission, G.R. No. 117652, April 27, 2000. Furthermore, a company’s management prerogatives shall be upheld so long as they are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.2 Aparente, Sr. v. National Labor Relations Commission, G.R. No. 117652, April 27, 2000. In this regard, the Court ruled that the dismissal of Alvin which hinged on a provision that prescribed dismissal even on the first instance of violation, should therefore be upheld.

    In this case, the Court ruled that PTC was well within its management prerogative in terminating Alvin’s employment upon a finding of violation of its company rules. The Court stated that Alvin’s actions revealed that he was aware of his violation of PTC’s rule. By his own admission, he instructed Fred to give the gift to Aaron in the far end of the office, as he knew that there was a surveillance camera in their work area. He thus knew that he was at risk of getting caught doing an act he should not do. Despite this, he still received the gift and did not return the same to Mustafa or even turned over the same to the Human Resources Department as instructed by PTC’s Code of Discipline. For the Court, the acts of Alvin revealed willful misconduct or disobedience of company rules that further justified PTC’s decision to terminate his employment.

    Further reading:

    • De Leon v. Philippine Transmarine Carriers, Inc., G.R. No. 232194, June 19, 2019.

  • His Position Became Unnecessary upon Shipment Completion

    On November 1, 2009, the employer hired Manuel as a technical consultant. Under the agreement, Manuel was tasked to:

    • Prepare reports;
    • Be the intermediary of certain teams;
    • Attend coordination meetings;
    • Evaluate billings; and
    • Conduct Site visits.

    Through a letter dated June 27, 2013, the employer informed Manuel of the termination of his employment due to the cessation of delivery operations and diminution of activities. Aggrieved by the actions of his employer, Manuel filed a complaint for illegal dismissal against it.

    The employer contended that it had sufficiently established redundancy of Manuel’s position. It presented certain documents to prove that there was a significant diminution in the volume of materials business and that the completion of shipment had rendered his position irrelevant. The employer further argued that it did not dismiss Manuel in bad faith, contending that it complied with labor law requirements in terminating his employment. The employer pointed out that he was given a notice of termination with computation of his separation pay, and that the Department of Labor and Employment was also notified.

    Was Manuel validly dismissed from employment on the ground of redundancy?

    The Supreme Court ruled that Manuel was not validly dismissed on said ground.

    The Court stated that redundancy is recognized as one of the authorized causes for dismissing an employee under the Labor Code of the Philippines. Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business.

    The Court further stated that for the implementation of a redundancy program to be valid, the employer must comply with the following requisites:

    • written notice served on both the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment;
    • payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher;
    • good faith in abolishing the redundant positions in that the employer must provide substantial proof that the services of the employees are in excess of what it requires; and
    • fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.

    In the present case, the Court acknowledged that the employer complied with the first and second requisites. It was able to notify Manuel and the Department of Labor and Employment at least a month before the planned redundancy. Manuel also received a computation of his separation pay corresponding to at least one month pay for every year of service with additional payment for economic assistance.

    However, the Court found that the employer failed to establish compliance with the third and fourth requisites.

    The Court discovered that the employer’s only basis for declaring petitioner’s position redundant was that his function, which was to monitor the delivery of supplies, became unnecessary upon completion of shipment.

    However, the Court discovered that Manuel’s employment agreement reveals the contrary as there was no mention of monitoring shipment as part of his tasks. The Court said that if his work pertains mainly to the delivery of supplies, it should have been specifically stated in his job description. Thus, the Court found no basis for the employer to consider Manuel’s position irrelevant when shipment had been completed.

    The Court also found that the employer failed to show that they used fair and reasonable criteria in determining what positions should be declared redundant.

    The Court explained that fair and reasonable criteria may take into account the preferred status, efficiency, and seniority of employees to be dismissed due to redundancy.

    However, the Court found that the employer never showed that it used any of these in choosing Manuel as among the employees affected by redundancy.

    The Court accordingly declared Manuel to have been illegally dismissed from employment.

    Further reading:

    • Acosta v. Matiere SAS, G.R. No. 232870, June 3, 2019.

  • We Validly Placed Our Employee on Floating Status

    On 9 April 1992, Airborne, a company engaged in providing manpower services to various clients, hired the services of Arnulfo as Janitor. He was assigned at the Balintawak Branch of Meralco, a client of Airborne.

    Almost twenty years thereafter, or on 30 June 2011, the contract between Airborne and the Balintawak Branch of Meralco expired. Meralco entered into a new contract with Landbees, which absorbed employees of Airborne except Arnulfo, who allegedly had a heart ailment.

    Arnulfo consulted a doctor, who declared that he was in good health and fit to work. He presented a medical certificate to Airborne, but the latter disregarded the same. He also reported for work but Airborne told him that no work was available for him.

    Feeling aggrieved, Arnulfo filed a complaint for constructive dismissal on 5 August 2011.

    Airborne insisted that Arnulfo was never dismissed from service because:

    • when its contract with the Balintawak Branch of Meralco ceased, it directed all its employees, including Arnulfo, to report to its office for reposting;
    • when Arnulfo failed to do so, it sent two (2) letters dated 12 August 2011 and 21 September 2011 at Arnulfo’s last known address, directing him to report to his new assignment at Meralco’s Commonwealth Business Center; and
    • said letters, however, were returned to sender with a notation “RTS unknown”

    The Office of the Labor Arbiter dismissed Arnulfo’s complaint.

    Arnulfo appealed and reiterated that he was constructively dismissed by Airborne. He pointed out that:

    • He made several follow-ups since 1 July 2011, but Airborne ignored him. He was not given a new assignment since then.
    • The letters were products of afterthought since Airborne was already aware of the constructive dismissal complaint prior to the sending of the said letters;
    • The letters could not possibly reach him because his address stated therein was incomplete. Arnulfo posits that such mistake was intentionally done for him not to receive the letters; and
    • He left his cellphone number with an administrative officer of Airborne, but never received a call from the latter.

    Airborne countered that Arnulfo introduced for the first time on appeal new factual allegations, as well as spurious, fabricated and self-serving evidence which should not be given credence.

    The National Labor Relations Commission reversed the findings of the Office of the Labor Arbiter and declared that Arnulfo was constructively dismissed from employment.

    The Court of Appeals and the Supreme Court agreed with the findings of the Commission.

    Ruling:

    Arnulfo was constructively dismissed from employment.

    The Supreme Court ruled that Airborne denied Arnulfo his employment because he had a heart ailment. Despite the declaration that he was fit to work, Airborne still did not give him any assignment.

    To give semblance of legality to their act of not giving him an assignment, Airborne sent him two (2) letters with an incomplete address after the filing of the constructive dismissal complaint. The sending of the letters were products of afterthought. However, an “[a]fterthought cannot be given weight or credibility.”1Skippers United Pacific, Inc. vs. NLRC, G.R. No. 148893, July 12, 2006.

    The Court was not convinced of the Airborne’s sincerity to give him a new assignment, for there was reason to believe that the incomplete address was intentionally done so that Arnulfo would not receive it and Airborne can thus set up the defense that it had the intention to have the complainant reposted by sending the letters.

    On Airborne’s claim that Arnulfo was only placed on floating status under Article 301 of the Labor Code of the Philippines2ARTICLE 301. (Formerly Article 286) When Employment not Deemed Terminated. — The bonafide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty..

    Jurisprudence3Lopez v. Irvine Construction Corp., G.R. No. 207253, August 20, 2014. dictates that:

    • The employer must prove the existence of a clear and compelling economic reason for the temporary shutdown of its business or undertaking and that there were no available posts to which the affected employee could be assigned; and
    • It should notify the Department of Labor and Employment and the affected employee, at least one month prior to the intended date of suspension of business operations.

    The Supreme Court found that Airborne failed to prove that the termination of the contract with Meralco resulted in a bona fide suspension of its business operations so as to validly place Arnulfo in a floating status. Airborne did not show that after the termination of its contract with Meralco, it was faced with a clear and compelling economic reason to temporarily shut down its operations or a particular undertaking. It also failed to show that there were no available posts to which Arnulfo could be assigned.

    Airborne also failed to show compliance with the notice requirement to the Department of Labor and Employment and to Arnulfo.

    Jurisprudence4Morales v. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2012.dictates that constructive dismissal is a dismissal in disguise as it is an act amounting to dismissal but made to appear as if it were not.

    In the present case, the Court found that the totality of the foregoing circumstances, specifically, Airborne’s

    • failure to prove the bona fide suspension of its business or undertaking;
    • failure to inform the Department of Labor and Employment, as well as Arnulfo, of the suspension of its operations,
    • act of ignoring Arnulfo’s follow-ups on a new assignment, and
    • belated sending of letters/notices which were returned to it

    were done to make it appear as if Arnulfo had not been dismissed. According to the Court, such acts, however, clearly amounted to a dismissal, for which Airborne should be liable.

    Further reading:

    • Airborne Maintenance and Allied Services, Inc. v. Egos, G.R. No. 222748, April 3, 2019.

  • A Long-Standing Practice

    Quintin was hired in June 1990 by AMA Education System (AMA) as a Mathematics and CAD Instructor. Eight years later, he was promoted as its School Registrar and was able to work as such until April 1999. While serving as School Registrar, he was promoted to the position of School Administrator/Chief Operations Officer of AMA’s College in Biñan, Laguna in January 1999.

    Quintin alleged that sometime in 2008, he applied for retirement relying on a long-standing policy of AMA Education System in granting early retirement benefits to its employees. While the said application for early retirement was being processed, Quintin was requested to continue his employment until after the enrollment period. Later, he was informed of the approval of his application, and the processing of the payment of his benefits.

    On June 3, 2008 Quintin was compelled to leave immediately for the USA to avoid the cancellation of his visa as a permanent resident.

    On September 3, 2010, while on vacation in the Philippines, Quintin filed a complaint for payment of retirement benefits/separation pay against AMA.

    AMA contended that Quintin’s request in 2008 for early retirement was disapproved. Before the denial could be communicated to him, Quintin had already left the country without submitting a resignation letter and following the standard company policy on proper turn over of work and accomplishment of clearance. AMA added that it was willing and ready to release to Quintin his last salary and 13th month pay in the total amount of PhP28,046.34, less an unliquidated amount for the 2008 graduation.

    Quintin retorted that he underwent an exit interview, clearance procedures, and turn over of work accountabilities. Quintin then claimed that his basic monthly salary was PhP51,310.00 and not PhP25,000.00. He also denied that he received the unliquidated budget for the 2008 graduation. Lastly, Quintin argued that while it had no written retirement plan, AMA had a long-standing practice of granting early retirement, separation pay, or cash gift or benefit to those who have not reached the compulsory retirement age or mandatory twenty-year service requirement.

    Was Quintin entitled to retirement benefits?

    The Supreme Court ruled that Quintin was entitled to retirement benefits from AMA.

    The Court stated that Article 3021formerly Article 287 of the Labor Code of the Philippines provides for the voluntary retirement age of 60 years old and mandatory retirement age of 65 years old. In addition to the age requirements, the employee must have served at least five years in the company. The statutory retirement benefit is pegged at one-half month salary for every year of service or a fraction thereof. The employer however, is free to grant other retirement benefits and impose different age or service requirements, provided that the benefits shall not be lesser than those provided in Article 302.

    The Court then discussed Article 1002ARTICLE 100. Prohibition against Elimination or Diminution of Benefits. — Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. of the Labor Code of the Philippines. According to the Court, the said Article expressly prohibits the elimination or reduction of benefits received by employees. However, the basis for the grant of said benefit must be shown through an express policy, written contract, or an unwritten policy that has ripened into a company practice. To be considered a practice, it must be consistently and deliberately made by the employer over a significant period of time.3Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, 639 Phil. 633, 641 (2010). The Court added that it has not defined what constitutes a “significant period of time.” Jurisprudence4Metropolitan Bank and Trust Co. v. National Labor Relations Commission, 607 Phil. 359 (2009). explains that the matter is decided according to the peculiar facts and circumstances of each case, the common denominator of which is the regularity and deliberateness of the grant of benefits over a significant period of time.

    In the present case, the Court found that Quintin was able to prove through substantial evidence the existence of an established company practice of granting early retirement to its employees who have rendered at least ten years of service, regardless of age. Specifically, the Court admitted the affidavits of Salvacion and Elsa, two former AMA employees, who both attested in their separate affidavits that they were former employees of AMA who were granted retirement benefits. The Court noted that although they did not personally confirm the award of their early retirement, the affidavits showed that they occupied managerial positions and were privy to the policies of the school and to the movements or retirement of their subordinate personnel. Nonetheless, the Court found that the affidavits revealed the following:

    • Salvacion was AMA’s School Director in Quezon City, while Elsa was its Registrar of the Basic Education Department, also in Quezon City;
    • Salvacion worked for AMA for 11 years and Elsa was with AMA for 18 years;
    • AMA granted an early retirement program to its employees who had rendered at least 10 years of service;
    • Both received early retirement benefits of one-month salary for every year of service pursuant to the early retirement program of AMA; and
    • Eight other employees were able to avail of the early retirement program.

    On the other hand, the Court also found that AMA merely denied that it had any existing early retirement policy and the grant of Salvacion and Elsa’s requests were isolated cases. However, the Court stressed that AMA did not submit controverting evidence to refute Salvacion and Elsa’s statements in their affidavits as to the grant of early retirement benefits to its other employees. Notably, AMA did not explain why Salvacion and Elsa’s requests for early retirement were granted but Quintin’s request was denied.

    The Court held that Quintin substantially proved that AMA had a consistent company practice of granting early retirement to its employees who have rendered at least 10 years of service. For the Court, Quintin is entitled to retirement benefits.

    Further reading:

    • Beltran v. AMA Computer College-Biñan, G.R. No. 223795, April 3, 2019.

  • Seafarer’s Obligation to Comply with His Medical Treatment

    Seachest Associates, through its manning agent, Maunlad Trans, Inc. hired the seafarer as a Galley Steward on-board MV Carnival. Several months into his employment, the seafarer began experiencing seasickness and extreme low back pains. Despite medications administered by the ship’s clinic, the pain persisted and extended down to the seafarer’s left thigh.

    Soon, the seafarer was medically repatriated and arrived in the Philippines on 23 January 2010. He reported to Maunlad Trans, Inc. and was referred to its designated physician. The seafarer underwent physical therapy sessions and was diagnosed with ‘lumbar spondylosis with disc extrusion, L3-L4.’ He was also advised to undergo surgery, spine laminectomy. However, he did not approve of the same and instead underwent physical therapy sessions. According to the seafarer, he refused because the company-designated physician informed him that the surgery will not guarantee a return to his normal condition.

    On 6 May 2010, the seafarer returned for a follow-up, and the report on his condition stated:

    Follow-up case of 28 years old male with Herniated Nucleus
    Pulposus, L3-L4, Left.
    EMG-NCV Study — chronic left L5-S1 radiculopathy
    Not keen on surgery.
    Continue rehabilitation.
    His suggested disability grading is Grade 8 — 2/3 loss of motion or lifting power of the trunk.
    To come back after 3 weeks.

    On 14 May 2010, the seafarer filed his complaint for total and permanent disability benefits since his condition did not improve for purposes of resuming regular duties as a seafarer. The employers retorted that the company-designated physician assessed the seafarer a disability rating of Grade 8, which had equivalent monetary benefits in the amount of US$16,795.00.

    The Office of the Labor Arbiter ruled that the company-designated physician’s Grade 8 disability rating was premature, in that it was made only to comply with the 120-day period as mandated in the Philippine Overseas Employment Administration Standard Employment Contract. The said Office further ruled that the work-related disability incurred by the seafarer had prevented him from seeking employment. Permanent disability benefits was accordingly awarded in favor of the seafarer.

    The National Labor Relations Commission and the Court of Appeals affirmed the Decision of the Office of the Labor Arbiter. The Court of Appeals added that:

    • the company-designated physician failed to arrive at a definite assessment of the seafarer’s fitness or disability within the 120/240-day periods provided under the law;
    • the company-designated physician’s last report on the seafarer’s condition which “suggested” a disability grading of “Grade 8 — 2/3 loss of motion or lifting power of the trunk” was not a final or definite assessment of his fitness or disability because the seafarer was still required to return after three weeks for further examination;
    • regardless of the fact that the seafarer was required to return for further examination, the statutory 120/240-day periods would have elapsed without the seafarer being issued either a final and definitive disability assessment or a fit-to-work certification;
    • the seafarer’s condition would not have improved even with the prescribed surgery, which he refused to undergo, because as admitted by the company-designated physician it did not guarantee improvement of seafarer’s condition;
    • the seafarer was unable to resume his regular sea duties, his inability to find work had continued, and he was not re-employed; and
    • with the lapse of the statutory 120/240-day periods without the seafarer’s having gone back to work, he should be deemed totally and permanently disabled.

    Ruling:

    The Supreme Court reversed the ruling of the Court of Appeals and declared that the seafarer was entitled to disability benefits in the amount of US$16,795.00 only, equivalent to Grade 8 disability under the Philippine Overseas Employment Administration Standard Employment Contract.

    Section 20(D) of the Philippine Overseas Employment Administration Standard Employment Contract states that “[n]o compensation and benefits shall be payable in respect of any injury, incapacity, disability or death of the seafarer resulting from his willful or criminal act or intentional breach of his duties, provided however, that the employer can prove that such injury, incapacity, disability or death is directly attributable to the seafarer.”

    According to the Supreme Court, the seafarer was duty-bound to comply with his medical treatment in order to give the company-designated physician the opportunity to determine his fitness to work or to assess the degree of his disability. His inability to continue his treatment without any valid explanation showed that he neglected such duty to continue his medical treatment.

    In the present case, the seafarer filed his complaint on 14 May 2010 — or just 110 days from his medical repatriation on 23 January 2010 — before the 120/240-day periods allowed under the Labor Code of the Philippines could elapse, and before the company-designated physician could render a definite assessment of his medical condition. According to the Court, the filing of the labor case was premature. By failing to continue with the treatment prescribed by the company-designated physician and instead filing the labor case before the expiration of the 120-day period, the seafarer violated the law and his contract with his employer and was thus guilty of abandoning his treatment.

    With regard to the claim of the seafarer that the surgery was not a guarantee that his condition will return to normal, the Court stated that the same does not entitle him to the indemnity he has sought. The fact remained that he violated his contract and the law. His infraction erased any benefit he may have derived from such argument. Although acknowledging that this was a medical opinion shared by the company-designated physician, the Court stated that it had the discretion to rely on such opinion or discard it altogether.

    The Court added that without the seafarer undergoing the prescribed 120/240-day periods for treatment, his employer was deprived of the opportunity to assist him in finding a cure for his condition and thus minimize any legal and pecuniary liability it may be held answerable for. At the same time, there was no way of assessing the seafarer’s medical condition with finality. Without such assessment, no corresponding indemnity was forthcoming. The seafarer must subject himself to treatment as prescribed by the law and the Philippine Overseas Employment Administration Standard Employment Contract, for such requirement is patently for his benefit in all respects.

    Further reading:

    • Maunlad Trans, Inc. v. Rodelas, Jr., G.R. No. 225705, April 1, 2019.

    Check Out My Latest YouTube Video

    [embedyt] https://www.youtube.com/embed?listType=playlist&list=UUA0qsY28UIiqNcY45Ez2rjg&layout=gallery[/embedyt]

  • Managerial Employees’ Entitlement to Optional Retirement Benefits under a Collective Bargaining Agreement

    Erika and Edna were both employees of Philippine Journalists, Inc. Erika started with the company on 11 May 1994 and left the company on 15 November 2008. She was an Ad Taker/Account Executive. Edna was employed since 05 September 1989 and was the Human Resources Department Supervisor when she ended her employment on 15 March 2009.

    Erika and Edna wrote separate letters on 28 October 2008 and 23 January 2009, respectively, informing Philippine Journalists, Inc. of their desire to avail of its optional retirement plan as embodied in the Collective Bargaining Agreement. They tendered their resignation from employment.

    Since Philippine Journalists, Inc. refused to give their optional retirement benefits, Erika and Edna filed a complaint for unfair labor practice and money claims, nonpayment of optional retirement benefits and service incentive leave against Philippine Journalists, Inc. before the Office of the Labor Arbiter.

    Philippine Journalists, Inc. countered that at the time Erika and Edna applied for optional retirement, it was suffering losses and had implemented a retrenchment program owing to these losses. It also averred that there was no express company policy on optional retirement when Erika and Edna applied for the same.

    Philippine Journalists, Inc. further asserted that there were employees who were granted optional retirement benefits in the past, but they were covered by an existing and approved optional retirement program. Two former employees attested to this assertion.

    The Office of the Labor Arbiter dismissed the complaint for lack of merit. It found that the Collective Bargaining Agreement categorized certain positions within Philippine Journalists, Inc. as managerial and are therefore excluded from the bargaining unit. According to the Office of the Labor Arbiter, since Erika and Edna were managerial employees, they were not entitled to optional retirement benefits.

    The National Labor Relations Commission, however, set aside the Decision of the Office of the Labor Arbiter and ruled that Erika and Edna were entitled to optional retirement benefits under the Collective Bargaining Agreement. According to the Commission, even if managerial employees were excluded from the coverage of the Collective Bargaining Agreement, there was a showing that there were certain managerial employees who were able to avail of, and were granted, optional retirement benefits.

    The Court of Appeals affirmed the ruling of the Commission on the ground that Philippine Journalists Inc.’s grant of optional retirement benefits to two of its managerial employees had ripened into a company practice that may be considered an enforceable obligation. Specifically, one managerial employee availed of the optional retirement benefits in 2003 while another retired optionally in 2001. For the Court of Appeals, Philippine Journalists, Inc. consistently granted optional retirement benefits in a considerable length of two years.

    Thus, the grant of optional retirement benefits by Philippine Journalists, Inc., even if it was not obliged under the Collective Bargaining Agreement, already constituted voluntary employer practice which cannot be unilaterally withdrawn or diminished by the employer without violating the Labor Code of the Philippines.1Article 100 of the Labor Code of the Philippines states: “ART. 100. Prohibition against elimination or diminution of benefits. — Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.”

    Ruling:

    In agreeing with the Court of Appeals, the Supreme Court ruled:

    To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.

    In the present case, the Supreme Court found that the grant of optional retirement benefits to two managerial employees in the past was voluntary, deliberate, and done with sufficient regularity as would indicate that this had become a company practice within Philippine Journalists, Inc.

    The Supreme Court further found that Philippine Journalists, Inc. was not incurring losses, and was in fact exhibiting conduct inconsistent with the claim.

    1)

    Philippine Journalists, Inc. appeared to have discriminated against its core employees, such as Erika and Edna, while it favored those in the upper tier of its management. It had been found guilty of illegal dismissal based on an illegal retrenchment scheme, while upper management continued to enjoy its perks and privileges and refused to tighten its belt in this respect.

    2)

    Philippine Journalists, Inc. pursued a scheme to reduce its personnel by any means necessary, which the Supreme Court viewed as unfair and prejudicial to the interests of labor. The Court took note of the situation of Erika and Edna, who resigned under the honest belief that they could avail of an optional retirement scheme similar to other employees in the past. According to the Court, if Philippine Journalists, Inc. believed that Erika and Edna were not entitled to avail of the optional retirement scheme, then it should have at least put their respective resignations on hold to clarify any issues. Instead, Philippine Journalists, Inc. was found to have taken a hostile stance, and had quickly grabbed the opportunity to declare Erika and Edna separated from their employment by voluntary resignation. It failed to take time to explain that the optional retirement program was no longer in effect and afford Erika and Edna the opportunity to reconsider their actions. The Court stated that Philippine Journalists, Inc. exhibited bad faith.

    3)

    Finally, the Court stressed that Philippine Journalists, Inc.’s bad faith was further evident when it falsely declared that it had suffered financial reverses since 1997. The Court found that Philippine Journalists, Inc. deceived their employees and used this false claim to deprive the latter of a fair appraisal of the facts and circumstances during negotiations leading to such agreement.

    For the Supreme Court, Philippine Journalists, Inc. engaged in unfair labor activities and took an anti-labor stance at the expense of its employees, which included Erika and Edna. The Court did not countenance the same.

    Further reading:

    • Philippine Journalists, Inc. v. De Guzman, G.R. No. 208027, April 1, 2019.

  • The Party Who Secures the Opinion of a Third Doctor

    Under the Philippine Overseas Employment Administration Standard Employment Contract, when the seafarer sustains a work-related illness or injury while on board the vessel, his fitness or unfitness for work should be determined by the company-designated physician.

    However, if the doctor appointed by the seafarer makes a finding contrary to that of the assessment of the company-designated physician, a third doctor might be agreed upon jointly by the employer and the seafarer, and the third doctor’s decision would be final and binding on both parties.

    The non-observance of the requirement to have the conflicting assessments determined by a third doctor would mean that the assessment of the company-designated physician prevails.

    The Supreme Court denied the seafarer’s claim for disability benefits in this case.

    According to the Court, the need for the third doctor’s evaluation of the seafarer arose after his personal doctor declared him unfit for seafaring duties. The seafarer could not initiate his claim for disability solely on the basis of the declaration of his personal doctor. He should have instead set in motion the process of submitting himself to assessment by the third doctor by first serving the notice of his intent to do so on the employer.

    The Court stressed that there was no other way to validate the claim of the seafarer but this. Without the notice of intent to refer the seafarer’s case to the third doctor, the employer could not itself initiate the referral.

    Unless the seafarer served the notice of his intent, he could not then validly insist on an assessment different from that made by the company-designated physician. This outcome, which accorded with the procedure expressly set in the Philippine Overseas Employment Administration Standard Employment Contract, was unavoidable for him.

    The employer could insist on the disability rating of its company-designated physician even against a contrary opinion by another doctor, unless the seafarer signified his intent to submit the disputed assessment to a third doctor. The duty to secure the opinion of a third doctor belonged to the employee asking for disability benefits. Said employee must actively or expressly request for it.

    Further reading:

    • Maersk-Filipinas Crewing, Inc. v. Alferos, G.R. No. 216795, April 1, 2019.

  • Filing a Strike Notice to Conceal the Illegality of the Strike

    Bigg’s, Inc. (Bigg’s) operates a restaurant chain with headquarters in Naga City, Camarines Sur.

    Bigg’s Employees Union (union) was formed by its employees and was granted a Certificate of Registration by the Department of Labor and Employment on January 30, 1996.

    Bigg’s Version of the Events

    Bigg’s claimed that on February 16, 1996, approximately fifty (50) union members staged an illegal “sit-down strike”1Sit-down is a form of strike where the strikers do not leave the workplace but merely establish themselves within the plant and stop production in its restaurant.

    Bigg’s stated that the union failed to file a notice of strike and conduct a strike vote. Bigg’s further stated that the union belatedly filed a notice of strike with the National Conciliation and Mediation Board on the same day of February 16, 1996 to cover up the illegality of the sit-down strike.

    Bigg’s also stated that it issued to the striking union members a memorandum which placed them under preventive suspension and required them to explain their actions within twenty four (24) hours from receipt of the same. Bigg’s claimed that since the union members did not comply with its order, it sent the said union members their employment termination letters on February 19, 1996.

    According to Bigg’s, it filed a complaint for illegal strike against the union members before the National Conciliation and Mediation Board.

    Union’s Version of the Events

    On the other hand, the union members accused Bigg’s of interfering with their union activities.

    They stated that in February 1996, Bigg’s asked them to withdraw their union membership under threat of losing their employment.

    They further stated that in the same month, Bigg’s dismissed two (2) employees from service due to their union membership.

    They also stated that on February 16, 1996, the union president and other union members, were prevented from entering Bigg’s premises.

    According to the union members, they filed a Notice of Strike with the National Conciliation and Mediation Board on the same day of February 16, 1996. When they attempted to return to work on the next day, they were instructed to obtain their respective memoranda from the main office in Naga City. They discovered that the memoranda informed them of their suspension from work for participating in a sit-down strike. Some union members tried to talk with Bigg’s management, but they were told not to report for work the next day.

    The union members thus filed a complaint for unfair labor practices, illegal dismissal, and damages against Bigg’s before the National Conciliation and Mediation Board.

    The National Conciliation and Mediation Board consolidated the two complaints and conducted mediation proceedings.

    When mediation reached an impasse, the union went on strike on March 5, 1996.

    Bigg’s claimed that during the strike on March 5, 1996, the union members:

    1) committed violence and disruptions;

    2) prevented ingress and egress of employees and customers to and from its premises;

    3) stopped Bigg’s vans from making deliveries;

    4) threw stones at the vans;

    5) injured the driver;

    6) damaged its vehicles and guardhouse; and

    7) discouraged people from going to Bigg’s Diner.

    The strike ceased when both parties agreed to compulsory arbitration.

    Were the strikes held on February 16, 1996 and March 5, 1996 illegal?

    The Supreme Court ruled that both strikes were illegal.

    Requirements of a Valid Strike

    The Court discussed established principles as follows:

    Strike, Concept

    A strike means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute.2Article 219 (formerly Article 212) (o) of the Labor Code of the Philippines.

    Procedural Requirements

    Article 2783Formerly Article 263 of the Labor Code of the Philippines, lays down the procedural requirements depending on the ground of the strike.4In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the Ministry at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the union may take action immediately.
    (d) The notice must be in accordance with such implementing rules and regulations as the Minister of Labor and Employment may promulgate.
    (e) During the cooling-off period, it shall be the duty of the Ministry to exert all efforts at mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of days from the mandatory filing of the notice, the labor union may strike or the employer may declare a lockout.
    (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided.     This provision was further implemented by Department of Labor and Employment Order No. 40-035Amending the Implementing Rules of Book V of the Labor Code of the Philippines and Department of Labor and Employment Order No. 40-A-036Amending Section 5, Rule XXII of the Implementing Rules of Book V of the Labor Code of the Philippines (March 12, 2003). which amended Book V of the Implementing Rules of the Labor Code of the Philippines.

    Grounds

    The Labor Code of the Philippines and its implementing rules limit the grounds for a valid strike to:

    1) a bargaining deadlock in the course of collective bargaining, or

    2) the conduct of unfair labor practices by the employer.7Section 5. Grounds for strike or lockout. — A strike or lockout may be declared in cases of bargaining deadlocks and unfair labor practices. Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. No strike or lockout may be declared on grounds involving inter-union and intra-union disputes or without first having filed a notice of strike or lockout or without the necessary strike or lockout vote having been obtained and reported to the Board. Neither will a strike be declared after assumption of jurisdiction by the Secretary or after certification of submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds or the strike or lockout.

    Who Can Declare a Strike

    Only a certified or duly recognized bargaining representative may declare a strike in case of a bargaining deadlock. However, in cases of unfair labor practices, the strike may be declared by any legitimate labor organization.8Section 6. Who May Declare a Strike or Lockout. — Any certified or duly recognized bargaining representative may declare a strike in cases of bargaining deadlocks and unfair labor practices. The employer may declare a lockout in the same cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in the establishment may declare a strike but only on grounds of unfair labor practices. (DO 40-03: Amending the Implementing Rules of Book V of the Labor Code of the Philippines, February 17, 2003).

    Strike Vote

    In both instances, the union must conduct a “strike vote” which requires that the actual strike is approved by majority of the total union membership in the bargaining unit concerned.

    Strike Vote Report

    The union is required to notify the regional branch of the National Conciliation and Mediation Board of the conduct of the strike vote at least twenty four (24) hours before the conduct of the voting. Thereafter, the union must furnish the National Conciliation and Mediation Board with the results of the voting at least seven (7) days before the intended strike or lockout.9Section 10. Strike or Lockout Vote. — A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda called for the purpose. A decision to declare a lockout must be approved by a majority of the Board of Directors of the employer, corporation or association or the partners in a partnership obtained by a secret ballot in a meeting called for the purpose. The regional branch of the Board may, at its own initiative or upon request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the regional branch of the Board and the notice of meetings referred to in the preceding paragraph at least twenty-four (24) hours before such meetings as well as the results of the voting at least seven (7) days before the intended strike, subject to the cooling-off period provided in this Rule. (DO 40-03)

    Jurisprudence teaches that this seven-day period has been referred to as the “seven-day strike ban”10CCBPI Postmix Workers Union v. National Labor Relations Commission, G.R. Nos. 114521 & 123491, November 27, 1998. or the “seven-day waiting period”11Lapanday Workers Union v. National Labor Relations Commission, G.R. Nos. 95494-97, September 7, 1995. and such period is intended to give the National Conciliation and Mediation Board an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.12Lapanday Workers Union v. National Labor Relations Commission, G.R. Nos. 95494-97, September 7, 1995.

    Period for Filing Notice of Strike/Cooling-off Period in Strikes Due to Bargaining Deadlock

    In a strike due to bargaining deadlocks, the union must file a notice of strike with the regional branch of the National Conciliation and Mediation Board at least 30 days before the intended date of the strike and serve a copy of the notice on the employer. This is the so-called “cooling-off period” when the parties may enter into compromise agreements to prevent the strike.

    Period for Filing Notice of Strike/Cooling-off Period in Strikes Due to Unfair Labor Practice

    In case of unfair labor practice, the period of notice is shortened to 15 days in that the union must file a notice of strike with the regional branch of the National Conciliation and Mediation Board at least 15 days before the intended date of the strike.

    In Cases of Union Busting

    In case of union busting, the “cooling-off period” does not apply 13but notice to strike still applies and the union may immediately conduct the strike after the strike vote and after submitting the results thereof to the regional arbitration branch of the National Conciliation and Mediation Board at least seven (7) days before the intended strike.14Section 7. Notice of Strike or Lockout. — In bargaining deadlocks, a notice of strike or lockout shall be filed with the regional branch of the Board at least thirty (30) days before the intended date thereof, a copy of said notice having been served on the other party concerned. In cases of unfair labor practice, the period of notice shall be fifteen (15) days. However, in case of unfair labor practice involving the dismissal from employment of any union officer duly elected in accordance with the union constitution and by-laws which may constitute union-busting where the existence of the union is threatened, the fifteen-day cooling-off period shall not apply and the union may take action immediately after the strike vote is conducted and the results thereof submitted to the appropriate regional branch of the Board. xxx xxx xxx Section 10. Strike or Lockout Vote. — A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda called for the purpose. A decision to declare a lockout must be approved by a majority of the Board of Directors of the employer, corporation or association or the partners in a partnership obtained by a secret ballot in a meeting called for the purpose. The regional branch of the Board may, at its own initiative or upon request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the regional branch of the Board and the notice of meetings referred to in the preceding paragraph at least twenty-four (24) hours before such meetings as well as the results of the voting at least seven (7) days before the intended strike or lockout, subject to the cooling-off period provided in this Rule. (DO 40-03).

    Strike Grounded on Unfair Labor Practice

    According to the Court, in a strike grounded on unfair labor practice, the following are the requirements:

    1) a strike declared by the duly certified bargaining agent or legitimate labor organization;

    2) the conduct of the strike vote in accordance with the notice and reportorial requirements to the National Conciliation and Mediation Board and subject to the seven-day waiting period; and

    3) the notice of strike filed with the National Conciliation and Mediation Board and copy furnished to the employer, subject to the 15-day cooling-off period. The Court restated that in cases of union busting, the 15-day cooling-off period shall not apply.

    The Union Conducted an Illegal Sit-down Strike on February 16, 1996

    A Sit-down Strike Occurred on February 16, 1996

    With regard to the first strike conducted by the union members on February 16, 1996, the Court found substantial evidence proving that the union staged a “sit-down strike.” Specifically, The Court considered the affidavits executed by certain Bigg’s employees deposing that the union members conducted a sit-down strike on February 16, 1996. These employees consistently narrated that in the morning of February 16, 1996, union members refused to do their jobs despite having directed to do so.

    Union Did Not File a Notice of Strike And Failed to Observe Cooling-off Period

    The Court further found that the union failed to file the requisite Notice of Strike and likewise failed to observe the cooling-off period. According to the Court, in an effort to legitimize the strike on February 16, 1996, the union filed a Notice of Strike on the same day. The Court said that this cannot be considered as compliance with the requirement, as the cooling-off period is mandatory. The cooling-off period is not merely a period during which the union and the employer must simply wait. The purpose of the cooling-off period is to allow the parties to negotiate and seek a peaceful settlement of their dispute to prevent the actual conduct of the strike. In other words, the Court said, there must be genuine efforts to amicably resolve the dispute.

    Ground of Unfair Labor Practice Was Not Proven

    Moreover, the Court found no proof that Bigg’s was guilty of unfair labor practice as defined under Article 25915Art. 259. (Formerly 248) Unfair Labor Practices of Employers. — It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization; (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters; (e) To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement: Provided, That the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent; (f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; (g) To violate the duty to bargain collectively as prescribed by this Code; (h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or (i) To violate a collective bargaining agreement. The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations, associations or partnerships who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. of the Labor Code of the Philippines to allow the union, a non-certified bargaining agent to initiate the strike.

    Union Busting Was Also Not Proven

    Likewise, the Court found that the union failed to prove the presence of union busting16To constitute union busting under Article 263 of the Labor Code,there must be: 1) a dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws; and 2) the existence of the union must be threatened by such dismissal. (Pilipino Telephone Corp. v. Pilipino Telephone Employees Association, G.R. Nos. 160058 &160094, June 22, 2007). to exempt it from compliance with the cooling-off period. The union did not present any substantial evidence to prove its allegations that union members were actually dismissed or threatened with dismissal for their union membership.

    For the Court, the union’s failure to comply with mandatory requirements rendered the strike on February 16, 1996 illegal.

    The Strike on March 5, 1996 Was Illegal Despite Compliance with Procedural Requirements

    With regard to the strike conducted on March 5, 1996, the Court found that the union complied with the procedural requirements of a valid strike. However, it was established that the striking union members committed acts of violence, aggression, vandalism, and blockage of the free passage to and from Bigg’s premises.

    Specifically, the Court considered an audio-video footage showing the union members’ acts of violence, aggression, and prevention of ingress to and egress from the premises of Bigg’s. Furthermore, it considered the undisputed facts that the union members:

    1) formed a human barricade and prevented delivery vehicles from passing through Bigg’s gates;

    2) placed three big stones along the gate entrance to keep the vehicles from exiting the premises; and

    3) flung stones at another van while it was on its way out of the area.

    Said the Court, while the law protects the right of workers to engage in concerted activities for the purpose of collective bargaining or to seek redress for unfair labor practices, this right must be exercised in accordance with the law, specifically Article 27917Formerly 264 (e) of the Labor Code of the Philippines which prohibits any person engaged in picketing from committing any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares.

    For the Court, the strike conducted on March 5, 1996 was illegal.

    Were the union officers and members validly dismissed?

    The Court reiterated principles relating to Article 27918Formerly Article 264 (a), which states: x x x Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. of the Labor Code of the Philippines in that for union members, what is required is that they knowingly participated in the commission of illegal acts during the strike for there to be sufficient ground for termination of employment. For union officers, however, it suffices that they knowingly participated in an illegal strike.

    Dismissal of the Union President Valid

    In the present case, the Court, found that the union president not only knowingly participated, but also was the one who principally organized the two (2) illegal strikes on February 16, 1996 and March 5, 1996. For the Court, the dismissal of the union president and the other union officers after the illegal strike on February 16, 1996 as well as the March 5, 1996 strike was valid.

    Union Members Who Did Not Participate in Any Prohibited Act During the Strikes, Dismissal Invalid

    However, the Court clarified that as to the union members who did not participate in any prohibited act during the strikes, their dismissal was invalid.

    Awards

    Such employees were awarded separation pay as prayed for by Bigg’s. The Court said that considering that twenty three (23) years have passed since the dismissal of the union members on February 19, 1996, and bearing in mind Bigg’s manifestation that it could no longer trust the striking employees especially as it is in the food service industry, separation pay may be more appropriate in lieu of reinstatement.19Consistent with Philippine Diamond Hotel & Resort, Inc. v. Manila Diamond Hotel Employees Union, G.R. No. 158075, June 30, 2006 where the Court made the following discussion: Reinstatement without backwages of striking members of respondent who did not commit illegal acts would thus suffice under the circumstances of the case. If reinstatement is no longer possible, given the lapse of considerable time from the occurrence of the strike, the award of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order.

    The relief of backwages was, however, not awarded said employees, consistent with jurisprudence which dictates that backwages are not granted to dismissed employees who participated in an illegal strike even if they are later reinstated.20In Escario v. National Labor Relations Commission (G.R. No. 160302, September 27, 2010), the Supreme Court held: Conformably with the long honored principle of a fair day’s wage for a fair day’s labor, employees dismissed for joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike.

    Further reading:

    • Bigg’s, Inc. v. Boncacas, G.R. Nos. 200487 & 200636, March 6, 2019.

  • But He Only Performed “Non-Core” Functions

    Marvin executed a Service Contract dated September 9, 2010 with Generation One Resource Service and Multi-Purpose Cooperative (Generation One) and assigned to work as a counter crew and cashier of its client, Southgate Foods, Inc. (Southgate), the owner of a Jollibee franchise located in Alphaland Southgate Mall, Makati City (Jollibee Alphaland). Generation One and Southgate had a Service Agreement where the former was to provide “specified non-core functions and operational activities” for the latter’s Jollibee Alphaland branch. Prior to his employment in Generation One, Marvin was directly employed by Southgate from March 12, 2010 to August 26, 2010 as counter crew.

    Later, Marvin filed a complaint for illegal dismissal against Generation One and Southgate. The latter alleged, among others, that they had a legitimate contracting arrangement and that their Service Agreement was valid.

    The labor tribunals ruled that Generation One was a legitimate contractor, having been a registered cooperative with substantial capital, investment, or equipment to perform its business. Said tribunals also ruled that Generation One had its own office where its members met and conducted activities.

    The Court of Appeals held that Generation One was a legitimate contractor as it was issued a Certificate of Registration by the Department of Labor and Employment. The Court of Appeals also found that the Service Agreement between Generation One and Southgate clearly stated that the former was to provide specific non-core functions and operational activities which included management and supervision of the food chain system, assistance in food preparation and quality control, cleaning of the dining area, comfort room, and other areas of the restaurant, assistance in cash control activities and warehouse and utilities management.

    Marvin filed a petition with the Supreme Court to assail, among others, the finding of legitimate contracting between Generation One and Southgate.

    Was Generation One a legitimate contractor?

    The Court ruled in the negative. It considered Generation One as a labor-only contractor.

    The Court first stated that outsourcing of services is not prohibited in all instances. The rules1Rules Implementing Articles 106 to 109 of the Labor Code, As Amended (P.D. No. 442, as amended), Department of Labor and Employment Order No. 18-02, February 21, 2002) relevant to the case provided that legitimate contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. The principal refers to any employer who puts out or farms out a job, service or work to a contractor or subcontractor.

    The Court then cited relevant rules on the prohibition against labor-only contracting, which describes the arrangement as one where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal, and any of the following elements is present:

    • The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or
    • The contractor does not exercise the right to control over the performance of the work of the contractual employee.

    The Court stated that based on the foregoing rules, a factor in determining whether there is labor-only contracting is the nature of the employee’s job, i.e., whether the work he performs is necessary and desirable to the business of the principal. Another factor is the ownership of substantial capital in the form of tools, equipment, machinery, work premises, and other properties by the contractor.

    In the present case, the Court disagreed with the assertion that Marvin performed “non-core” functions or peripheral activities. According to the Court, the assertion was simply preposterous and contrary to the basic business model of a fast food restaurant. Instead, the Court found that Marvin’s cash control activities which involved order-taking, food-assembling, receiving payments, and giving change were necessary and desirable to the business of a fast food restaurant, such as the franchise owned by Southgate.

    Furthermore, the Court disagreed with the labor tribunals’ findings that Generation One was able to prove that it had substantial capital.

    The Court found that Generation One’s Income Tax Return for the year ended December 2010 showing a gross income of around P9.5 million was hardly substantial evidence to prove substantial capitalization because the same was not submitted to the Bureau of Internal Revenue. The Court also found that Generation One only submitted the Notes to the Audited Financial Statements for the year ended 2010, and not the actual Audited Financial Statements itself. For the Court, the said Notes failed to show a complete picture of its financial standing.

    The Court then ruled that the Certificate of Registration relied upon by the Court of Appeals was not conclusive evidence of legitimate contracting status. According to the Court, registration with Department of Labor and Employment as an independent contractor does not automatically vest status of a legitimate contractor; it is merely presumptive proof. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising.2San Miguel Corporation v. Semillano, G.R. No. 164257, July 5, 2010.

    With regard to control, the Court noticed that Southgate took it upon itself to discipline Marvin for an alleged violation of its company rules, regulations, and policies. For the Court, this validated the presence of its right to control Marvin. The Court also looked into Marvin’s Service Contract and discovered that his work responsibilities were to be specified at the designated place of assignment. This suggested that the right to determine not only the end to be achieved, but also the manner and means to achieve that end, was reposed in Southgate.

    Finally, it did not accept the reliance by the Court of Appeals on the provision in the Service Agreement between Generation One and Southgate which stated the absence of an employment relation between Southgate and the employees of Generation One. The reason was that the character of the business, whether as labor-only contractor or as a job contractor, should be determined by the criteria set by statute and the parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business.3Petron Corp. v. Caberte, G.R. No. 182255, June 15, 2015.

    The Court stated that in distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. Here, the Court found that ruled that the badges of labor-only contracting were too blatant to ignore.

    With the finding that Generation One was a labor-only contractor, the Court applied the rule that the principal shall be deemed the employer of the contractual employee where there is labor-only contracting. Marvin was thus declared to be a regular employee of Southgate.

    Further reading:

    • Daguinod v. Southgate Foods, Inc., G.R. No. 227795, February 20, 2019.

  • Rules on Seafarer Claims for Permanent Total Disability Benefits

    Abosta Shipmanagement Corporation/Cido Shipping Company Ltd. hired the seafarer as an able seaman on board the vessel M/V Grand Quest. The seafarer boarded the vessel on 16 June 2009.

    While he was on duty on 26 October 2010, the seafarer felt cramps followed by severe back pain. He was able to inform his master, who then advised him to rest. The next day, the seafarer was unable to stand that he remained in his cabin. When the vessel arrived in Panama, he was diagnosed with a lumbar disc problem and was recommended repatriation.

    On 2 December 2010, the seafarer arrived in Manila and was referred to the company-designated physician, who then proceeded to treat him. On 8 July 2011 the company-designated physician issued a disability rating of “Grade 8 disability — moderate rigidity or 2/3 loss of motion or lifting power of the trunk.”

    The seafarer asserts that despite the treatment he received, his condition did not improve, as the pain and discomfort persisted.

    The seafarer sought treatment from his personal doctor, who conducted his own examination. Said doctor concluded that the nature and extent of the seafarer’s injury rendered him permanently and totally unable to work as a seafarer.

    The seafarer demanded his employers to pay him total and permanent disability. Since the employers declined, the seafarer instituted his complaint for permanent total disability benefits and attorney’s fees against the former.

    Questions:

    1. Is the seafarer entitled to permanent total disability benefits?
    2. Can he be granted attorney’s fees?

    Answers:

    1)

    The seafarer is entitled to permanent total disability benefits.

    Jurisprudence dictates that if there is a claim for total and permanent disability benefits by a seafarer, the following rules shall govern:

    • The company-designated physician must issue a final medical assessment on the seafarer’s disability grading within a period of 120 days from the time the seafarer reported to him;
    • If the company-designated physician fails to give his assessment within the period of 120 days, without any justifiable reason, then the seafarer’s disability becomes permanent and total;
    • If the company-designated physician fails to give his assessment within the period of 120 days with a sufficient justification (e.g., seafarer required further medical treatment or seafarer was uncooperative), then the period of diagnosis and treatment shall be extended to 240 days. The employer has the burden to prove that the company-designated physician has sufficient justification to extend the period; and
    • If the company-designated physician still fails to give his assessment within the extended period of 240 days, then the seafarer’s disability becomes permanent and total, regardless of any justification.

    In the present case, the company-designated physician failed to issue a medical assessment on the seafarer’s disability grading and determine the seafarer’s fitness to work within the prescribed periods.

    From the seafarer’s repatriation and immediate referral to the company-designated physician on 2 December 2010 until the 120th day of his treatment (31 March 2011), the latter did not issue any medical assessment.

    Although on 8 July 2011, the company-designated physician was able to issue a disability rating of “Grade 8 disability — moderate rigidity or 2/3 loss of motion or lifting power of the trunk,” 219 days have already lapsed from 2 December 2020 without any sufficient justification for the extension of the 120-day treatment period.

    Following prevailing jurisprudence, the seafarer’s disability has become permanent and total. Accordingly, the seafarer is entitled to permanent total disability benefits.

    2)

    The seafarer is also entitled to attorney’s fees. This is because under Article 2208, paragraph 8 of the Civil Code of the Philippines, attorney’s fees can be recovered in actions for indemnity under workmen’s compensation and employer’s liability laws.

    Further reading:

    • Abosta Shipmanagement Corp. v. Segui, G.R. No. 214906, January 16, 2019.

    Check Out My Latest YouTube Video

    [embedyt] https://www.youtube.com/embed?listType=playlist&list=UUA0qsY28UIiqNcY45Ez2rjg&layout=gallery[/embedyt]